VSME vs CSRD: does your SME need to report?

Most SMEs do not have to report under the CSRD, especially after the 2026 Omnibus changes. But banks and large customers still ask for data, and the VSME is the format the European Commission recommends for those requests.

The short answer

The Corporate Sustainability Reporting Directive (CSRD) is a legal obligation. The VSME is a voluntary standard. After the 2026 Omnibus changes, the CSRD obligation applies to EU companies with more than 1,000 employees and a net turnover above 450 million euro [1]. A typical SME is far below that. What reaches SMEs is not the law itself but the questions from banks and large customers, and that is where the VSME comes in.

What changed in 2025 and 2026

The timeline matters, because many older articles still describe the original CSRD scope.

February 2025: the Commission proposed the Omnibus simplification package [3].
April 2025: the "stop-the-clock" Directive (EU) 2025/794 postponed reporting for the second and third waves of companies by two years [3].
30 July 2025: the Commission adopted Recommendation (EU) 2025/1710, recommending the VSME standard to SMEs as an interim step [4].
March 2026: the Omnibus I Directive amending the CSRD entered into force on 18 March 2026, with the new thresholds of more than 1,000 employees and more than 450 million euro turnover [1][2].
September 2026: the Voluntary Standard, Delegated Regulation (EU) 2026/1560, was published in the Official Journal on 21 September 2026 and entered into force on 24 September 2026 [6]. It is based on the VSME, with changes kept to a minimum [5].

Three questions to find your position

1. Are you in CSRD scope?

Count employees and look at net turnover. If you are not above both thresholds after the Omnibus, you are not required to publish a CSRD sustainability statement [1]. Your country transposes the Directive into national law, so check the national version or ask your accountant.

2. Are you in the value chain of a company that is?

If you supply a large company, it may need data from you for its own report. The Omnibus introduced a value chain cap: a company in CSRD scope cannot require partners with up to 1,000 employees to provide more than what the Voluntary Standard sets out [2]. According to the published regulation, this cap applies to financial years starting on or after 1 January 2027 [6].

3. Do your bank or customers ask anyway?

Questions in a loan application or a supplier contract are a separate matter from CSRD reporting. Even then, the 2025 Recommendation asks companies and banks that request sustainability information from SMEs to keep their requests within the VSME [4]. That gives you a reasonable reference point when a questionnaire asks for far more.

VSME and CSRD side by side

	CSRD with ESRS	VSME / Voluntary Standard
Legal status	Mandatory for companies in scope	Voluntary
Who	EU companies with more than 1,000 employees and more than 450 million euro turnover [1]	Companies outside the mandatory scope, especially SMEs [4]
Size of the report	Detailed standards (ESRS)	Basic Module of eleven disclosures, optional Comprehensive Module [7]
Role in the value chain	Asks suppliers for data	Sets the limit of what can be required from smaller partners [2]

Worked example

An illustrative case: a metal parts supplier with 85 employees and 14 million euro turnover. It supplies a car maker that is in CSRD scope, and its bank asks ESG questions at the yearly credit review.

CSRD: not in scope. 85 employees is well under 1,000 [1].
Car maker: may ask for data, but from financial years starting 1 January 2027 cannot require more than the Voluntary Standard for its CSRD reporting [6].
Bank: not covered by that cap, but the Recommendation asks it to stay within the VSME [4].
Practical choice: prepare one VSME Basic Module report a year and send the same document to both. Answer extra questions only where the business relationship makes it worth it.

Template: a short reply when a customer asks for CSRD data

Subject: Sustainability information for [customer]

Dear [name],

Thank you for your request. [Company] is not in scope of the CSRD.
We report on a voluntary basis using the VSME standard, Basic Module,
which the European Commission recommends for requests to SMEs
(Recommendation (EU) 2025/1710).

Attached is our VSME report for [period]. It covers energy and
emissions, pollution, biodiversity, water, waste, our workforce and
business conduct.

If you need information beyond this report, please tell us which
data point and why, and we will see what we can provide.

Kind regards,
[name, role]

What the VSME does not do

It does not make you CSRD-compliant if you are in scope. Companies in scope use the ESRS.
It does not oblige your customers or bank to accept it, outside the cap described above.
It is not a label or certificate. It is a reporting format.

Next steps: see what to report in the Basic Module, or read how to answer a bank questionnaire. If you are weighing the effort, compare spreadsheet, tool or consultant.

Related guides

Sources

This guide explains the rules in plain language. It is not legal advice. Check your own country's law and, when in doubt, ask a qualified adviser.